South African technology group, Altech, is selling off its beleaguered East African operations months after the firm announced plans to sell 75% of its West African business.
The move forms part of a deal planned to see telecommunications firm Liquid Telcom taking over Altech’s relevant assets in that region, according to a statement.
Liquid Telecom, which is majority owned by Econet Wireless Global, is a supplier of fibre, satellite, international carrier services and infrastructure to fixed and mobile telecommunications operators, internet service providers (ISPs) and enterprises in developing countries – particularly in central and southern Africa.
As part of the deal, Altech plans to purchase an additional ordinary shareholding in Liquid to the amount of $16.5 million, and intends on remaining a strategic minority shareholder in Liquid, holding an initial 8.6% of Liquid’s issued share capital.
For as long as Altech then holds all of the shares, it will be entitled to 10% of all votes capable of being cast at general meetings of ordinary shareholders of Liquid. Furthermore, for so long as Altech holds not less than 5% of the total issued share capital of Liquid, Altech will be allowed to appoint one director on the group board, says the company.
Altech, though, will not be entitled to any Liquid dividend payouts for 18 months as per the agreement.
The move comes as Altech has struggled to perform in its African markets.
Altech reported an accounting loss before tax in the six months to end-August 2012 of R485 million. And in a statement in September last year, the company announced that it had agreed to sell its 75% stake in Altech West Africa, which produces vouchers for mobile network operators but had been losing money for the preceding 18 months.
In terms of its East African market, withdrawal of key contracts and stiff local competition have been key reasons that Altech has attributed to its poor performance in that region. However, Altech has further blamed other factors such as currency performance in East Africa, network instability and reliability issues.
Altech’s move to dispose of its East African operations is to further result in Liquid owning 80% in the likes of data carrier and infrastructure provider Kenya Data Networks.
Meanwhile, Liquid intends transferring Altech Swift Global Limited (ASG) to KDN after the transaction.
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